Question 1

Al, who is single, has a gain of $40,000 on the sale of § 1244 stock (small business stock) and a loss of $80,000 on the sale of § 1244 stock.As a result, Al has a $40,000 ordinary loss.

Accepted Answer

A) True 
 B)False

Question 2

Green Corporation earns active income of $50,000 and receives $40,000 in dividends during the year.In addition, Green incurs a loss of $70,000 from an investment in a passive activity acquired several years ago.Consider the following two statements: (1)  Green's current deduction for passive activity losses is $50,000 if it is a closely held C corporation that is not a personal service corporation. (2)  Green's current deduction for passive activity losses is $0 if it is a personal service corporation.Which of the following answers is correct?

Accepted Answer

A)  Only statement 1.
B)  Only statement 2.
C)  Both statements 1 and 2.
D)  Neither statement 1 or 2.
E)  None of these.F) C) and E)
G) A) and E)

Question 3

If a taxpayer sells her or his § 1244 stock at a loss, all of the loss will be ordinary loss.

Accepted Answer

A) True 
 B)False

Question 4

Last year, taxpayer had a $10,000 nonbusiness bad debt.Taxpayer also had an $8,000 short-term capital gain and taxable income of $35,000.If taxpayer collects the entire $10,000 during the current year, $8,000 needs to be included in gross income.

Accepted Answer

A) True 
 B)False

Question 5

In the current year, Crow Corporation, a closely held C corporation that is not a personal service corporation, has $100,000 of passive activity losses, $80,000 of active business income, and $20,000 of portfolio income.How much of the passive activity loss may Crow deduct in the current year?

Accepted Answer

A)  $0.
B)  $20,000.
C)  $80,000.
D)  $100,000.
E)  None of these.F) C) and D)
G) C) and E)

Question 6

Pablo, who is single, has $95,000 of salary, $10,000 of income from a limited partnership, and a $27,000 passive activity loss from a real estate rental activity in which he actively participates.His modified adjusted gross income is $95,000.Of the $27,000 loss, how much is deductible?

Accepted Answer

A)  $0
B)  $10,000
C)  $25,000
D)  $27,000
E)  None of theseF) C) and D)
G) A) and C)

Question 7

Personal casualty gains are allowed to offset personal casualty losses.Currently, if an excess casualty loss results, it is not deductible (unless attributable to a Federally declared disaster).

Accepted Answer

A) True 
 B)False

Exam 6: Losses and Loss Limitations

Al, who is single, has a gain of $40,000 on the sale of § 1244 stock (small business stock) and a loss of $80,000 on the sale of § 1244 stock.As a result, Al has a $40,000 ordinary loss.

Correct Answer
verified

If a taxpayer sells her or his § 1244 stock at a loss, all of the loss will be ordinary loss.

Correct Answer
verified

Personal casualty gains are allowed to offset personal casualty losses.Currently, if an excess casualty loss results, it is not deductible (unless attributable to a Federally declared disaster).

Correct Answer
verified

In the current year, Crow Corporation, a closely held C corporation that is not a personal service corporation, has $100,000 of passive activity losses, $80,000 of active business income, and $20,000 of portfolio income.How much of the passive activity loss may Crow deduct in the current year?

Correct Answer
verified

Correct Answer
verified

Pablo, who is single, has $95,000 of salary, $10,000 of income from a limited partnership, and a $27,000 passive activity loss from a real estate rental activity in which he actively participates.His modified adjusted gross income is $95,000.Of the $27,000 loss, how much is deductible?

Correct Answer
verified

Last year, taxpayer had a $10,000 nonbusiness bad debt.Taxpayer also had an $8,000 short-term capital gain and taxable income of $35,000.If taxpayer collects the entire $10,000 during the current year, $8,000 needs to be included in gross income.

Correct Answer
verified

Exam 6: Losses and Loss Limitations

Al, who is single, has a gain of $40,000 on the sale of § 1244 stock (small business stock) and a loss of $80,000 on the sale of § 1244 stock.As a result, Al has a $40,000 ordinary loss.

Correct AnswerverifiedShow Answer

If a taxpayer sells her or his § 1244 stock at a loss, all of the loss will be ordinary loss.

Correct AnswerverifiedShow Answer

Personal casualty gains are allowed to offset personal casualty losses.Currently, if an excess casualty loss results, it is not deductible (unless attributable to a Federally declared disaster).

Correct AnswerverifiedShow Answer

In the current year, Crow Corporation, a closely held C corporation that is not a personal service corporation, has $100,000 of passive activity losses, $80,000 of active business income, and $20,000 of portfolio income.How much of the passive activity loss may Crow deduct in the current year?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Pablo, who is single, has $95,000 of salary, $10,000 of income from a limited partnership, and a $27,000 passive activity loss from a real estate rental activity in which he actively participates.His modified adjusted gross income is $95,000.Of the $27,000 loss, how much is deductible?

Correct AnswerverifiedShow Answer

Last year, taxpayer had a $10,000 nonbusiness bad debt.Taxpayer also had an $8,000 short-term capital gain and taxable income of $35,000.If taxpayer collects the entire $10,000 during the current year, $8,000 needs to be included in gross income.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified